Therapy Strategies Begin to Shift Post-PDPM as Genesis Lays Off 5% of Rehab Staff

Just one day after the new Medicare payment model for nursing homes took effect, providers throughout the industry have begun showing signs of changing therapy strategies — and one of the nation’s top operators confirmed the layoff of about 585 rehab employees.

A spokesperson for Genesis HealthCare (NYSE: GEN) confirmed to SNN that the company had cut those positions, or just under 6% of its 10,000 rehab-focused workforce, in an e-mail; Modern Healthcare initially reported the figure Wednesday.

The Kennett Square, Pa.-based skilled nursing giant does not use any independent contractor therapists, the spokesperson confirmed.


The report marked the first overt sign of changing rehab strategies under the new Patient-Driven Payment Model (PDPM) for nursing homes, which took effect at the start of the federal government’s 2020 fiscal year on Tuesday.

The new Medicare payment system, in the works since April, changes incentives for the nation’s 15,000 nursing homes. Under the old structure, known as Resource Utilization Group, Version IV (RUG-IV), there was a direct line between the volume of therapy services provided and the final amount of reimbursement from the Medicare program.

PDPM changes that by linking reimbursements more closely to resident conditions: The more complex a nursing home patient’s needs, the more money an operator must spend on his or her care — and, in turn, the greater the payment from Medicare.


The Centers for Medicare & Medicaid Services (CMS) explicitly positioned the move as a way to reduce fraud in the Medicare system — the Department of Justice has frequently gone after post-acute operators that it had accused of billing Medicare for unnecessary therapy services — while also putting the patient at the center of care decisions.

In turn, both skilled nursing operators and their contract therapy partners have worked to recalibrate their strategies to ensure both proper payment and quality resident care. On the income side, operators have considered investing in certain higher-acuity and specialty services, such as speech therapy or cardiac care. On the expense side, group and concurrent therapy has re-emerged as a potential way to weather a landscape where hours don’t directly correlate with reimbursements.

Though PDPM caps group and concurrent services at 25% of each individual beneficiary’s total therapy plan, such modalities generally accounted for less than 1% of rehab services under the old RUG system, prompting interest in shifting care to that setting in the wake of the October 1 changes.

Back in May, Genesis CEO George Hager estimated that the increased use of group and concurrent services, along with paperwork reductions associated with fewer mandatory assessments, would lead to a 10% to 12% drop in the company’s costs.

While the changes had been discussed and dissected at the executive level for about 18 months, the arrival of PDPM this week has raised concerns among therapists on the ground level across the country. A petition asking the Department of Health and Human Services to reconsider its decision, citing concerns about therapist employment and resident care, has gathered nearly 17,000 signatures in four days.

At the Louisville, Ky.-based skilled nursing operator Signature HealthCARE, the advent of PDPM saw therapists take “a small pay adjustment” to preserve jobs and maintain care, a spokesperson told SNN.

“We are grateful to our therapists for being team players, accepting this necessary change, and staying with us to help us care for our residents,” the spokesperson said via e-mail. “We are thankful for the commitment our therapy stakeholders demonstrate each and every day to our residents, and we are unwavering in our support of them and the quality services they provide.”

For Aegis Therapies, a rehab provider with a presence in 41 states, the PDPM plan incorporated efficiencies that led to reduced labor hour needs, president and CEO Martha Schram told SNN. The first step was a decline in per-diem labor, which Schram said that Aegis had relied upon “rather heavily,” with anticipated drops in the use of contract-labor therapists.

The company also foresees “a moderate further reduction in labor hours” in certain markets, though Schram noted that the decisions will be made on a case-by-case basis.

“Aegis’s commitment is to base staffing decisions on patient care needs at each location versus any sort of broad actions,” Schram said. “Therefore, we are analyzing daily, and will make adjustments as we have data that supports that necessity. We have committed to our employees to evaluate current open positions before making any changes to existing labor.”

A spokesperson for Reliant Rehabilitation, another major skilled nursing therapy provider, confirmed that there had been “some reductions” in workforce, but also pointed to the firm’s PDPM prep work, including the development of specific care pathways for different conditions.

“PDPM changes how providers are reimbursed for patient care, but our mission remains unchanged whether we are guided by PDPM or RUGs,” the Reliant spokesperson said via e-mail. “As the industry adapts to the new payment model, we may similarly make adjustments to staffing as appropriate, but ultimately, helping our SNF partners with therapy programs that achieve excellent patient outcomes remains our highest priority regardless of the payment model.”

Cynthia Morton, executive vice president of the National Association for the Support of Long-Term Care (NASL), emphasized that the PDPM shift remains new and only affects one part of the overall nursing home reimbursement landscape; in general, Medicaid accounts for the majority of most individual buildings’ census and income.

“I don’t think people should panic,” Morton said. “The world’s not coming to an end. We’re just having one big change in part of our reimbursement system.”

Maggie Flynn contributed reporting to this story.

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